No gain from 'gainful employment' regs

06/10/2014

Over the years, as I have worked to reform education in the K-12 arena, I have become convinced that the more quality options available, the better for our kids. Especially since our most vulnerable citizens generally have fewer and poorer education options to begin with.

The same argument holds true for colleges. Low income, working class adults who seek to make themselves more employable and increase their earning capacity often are stymied by burgeoning higher education costs. For those Americans, their only realistic path to a higher education degree is by way of quality online programs like those offered by Kaplan, Strayer, the University of Phoenix and others.

Knowing that, I remain mystified as to why the Obama administration is so determined to change the regulations governing loans for students in for-profit colleges. The so-called "Gainful Employment" regulations purportedly would assess the value of for-profit institutions by linking the prices those schools charge with the federal financial aid debt their students incur. In other words, the department is raising the loan-qualifying standards for the population with the most acute loan needs. And schools that don't meet the department's new standards could be shut down.

The Department of Education says the new regulations are necessary to help abate the growing percentage of student loan defaults and to prevent students from taking on too much debt. But the reality is that our most needy students' access to loans would be severely impacted. And quality programs would also suffer as a result.

Yes, there have been some bad actors in this brave new world of online learning. But, just like K-12 education, post-secondary students benefit from more diverse educational choices. But gainful employment punishes the entire for-profit college sector when only a few schools have been accused of doing anything wrong. Moreover, private sector, for-profit colleges educate only 20% of the students receiving financial assistance in higher education, yet are the only ones subjected to this new rule. The truth is that many non-profit colleges and state universities wouldn't meet the Obama administration's new standards either.

In 2012, Federal Judge Rudolph Contreras struck down the Education Department’s first attempt at Gainful Employment rules, calling them "arbitrary." He found the department did not have sufficient evidence to judge private-sector schools based on students' loan repayment rate.

Moreover, even members of the Congressional Black Caucus and other civil rights leaders have spoken out against this obvious assault on for-profit colleges. Despite the outcry, the administration seems determined to implement these new rules.

Just this week, Citizens for Responsibility and Ethics in Washington raised questions about how much Robert Shireman, who is under investigation by the Department of Education's Office of Inspector General, was involved in drafting the new rule. Shireman is accused of violating ethics laws by discussing sensitive government information with an outside agency while he was deputy undersecretary during Obama's first term. Yet he's emerged again as one of the most vocal advocates for Gainful Employment.

When I wrote about this issue some time ago, like many others, I speculated as to why this policy was so important to the president. Is it being driven by traditional colleges who view the growing for-profit student population as a threat? Only the Administration can answer that question.

But one thing is for sure: The Gainful Employment regulation will damage the economy, kill jobs and hurt working families by limiting their access to higher education opportunities. None of this is good. Just as we have seen in K-12 education, higher education students, particularly low income students, benefit from more diverse educational choices. And they shouldn't be blocked from those choices just because the provider happens to be for-profit. After all, doesn't it make sense to let the students decide where they want to receive their education without unnecessary federal government interference?

Chavous is an education policy advocate who formerly served on the Washington, D.C. city council and was an education policy adviser to Barack Obama's presidential campaign.